YouTube to split revenues with users

Site will offer advertising option for videos

YouTube could take an important step toward integrating advertising with its vast library of videos as soon as next week.

Content creators who upload their videos to the site will be offered the option of having short ads shown at the beginning or end, with the resulting revenues split 50-50, according to Howard Lindzon, founder of Wallstrip, a finance-oriented site that distributes videos through YouTube. Key to the new venture will be making sure that those who upload video actually own the rights to it — which has been a vexing issue in the past for YouTube, now part of Google’s Silicon Valley empire.

Another analyst, from Bear Stearns & Co., has estimated the site’s 2006 revenue at a paltry $15 million; Google paid $1.65 billion to acquire the company.

YouTube co-founder Chad Hurley, who from the company’s start resisted the idea of integrating anything that felt like a commercial, first mentioned the possibility of inserting ads into videos in January.

Google CEO Eric Schmidt, speaking at the Web 2.0 Expo in San Francisco, alluded to advertising as one way that YouTube might cuddle up to previously hostile copyright holders. He called YouTube “a wonderful place for people to take copyrighted information, and, with our support, build ad-supported businesses.”

To help copyright holders keep off the site content they don’t want there, Schmidt said a new tool, Claim Your Content, would soon be available.

Figuring out who controls which content on YouTube has been a problem, as the site is required by law to remove content when copyright holders ask. Prior to filing a lawsuit against YouTube in March, Viacom had asked the site to take down 100,000 clips, and YouTube complied.

But Schmidt related an anecdote in which someone purporting to represent the Australian Broadcasting Corp. asked YouTube to remove all its content. YouTube complied, before finding out that “a 16-year-old in Australia had sent the letter,” Schmidt said. “The ABC got in touch and asked us to put it back in.”

Schmidt also said he considered Viacom’s lawsuit a negotiating tactic.

“That will infuriate Viacom,” Bernoff said. “It may have been a negotiating tactic once, but it’s not now.”